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We would venture to say that most, if not all, refutations and critiques of conservative/libertarian thought are based on ignorance of what they believe. Sometimes it's deliberate, because the Left wants to maintain and accumulate power. Rarely, it is due to honest misunderstanding. We think the below very long presentation is the former.
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This article appears in the Winter 2015 issue of The American Prospect magazine.
The stubborn appeal of the libertarian idea persists, despite mountains of evidence that the free market is neither efficient, nor fair, nor free from periodic catastrophe. (Interesting that the alternative, government intervention and central planning, is orders of magnitude worse.
We suspect the author is using words like "efficient" and "fair" in a different sense than the typical person, let alone how a libertarian might use them.)
In an Adam Smith world, the interplay of supply and demand yields a price that signals producers what to make and investors where to put their capital. The more that government interferes with this sublime discipline, the more bureaucrats deflect the market from its true path.
But in the world where we actually live, markets do not produce the “right” price. (The author seems to expect perfection, that is, each transaction gets it exactly right according to his particular criteria. This is an unreasonable standard, a standard to which the author does not hold for his own preferred economic mechanism.
Interesting, though, is the fact that it is the fairytale utopian economics of central planning that defines our present system, where we in fact have a "world where we actually live" manifestation of what the author prefers. What a disaster this has been! How many times does the Left get to try their hairbrained schemes on us? How many failures do we have to endure? When do we get relief from big government advocates so that we can actually try a libertarian theory or two?)
There are many small examples of this failure, but also three immense ones that should have discredited the libertarian premise by now. Global climate change is the most momentous. The price of carbon-based energy is “correct” — it reflects what consumers will pay and what producers can supply — if you leave out the fact that carbon is destroying a livable planet. Markets are not competent to price this problem. Only governments can do that. In formal economics, this anomaly is described by the bloodless word “externality” — meaning costs (or benefits) external to the immediate transaction. Libertarian economists treat externalities as minor exceptions. (Might we politely note that Global Climate Change is occurring in our heavily regulated economy? Despite a plethora of laws and regulations imposed by government, the problem still exists. We would suggest to the author that his precious government is not up to the task of solving it.
More to the point, is libertarianism inadequate to address problems like these? Not at all. For example, the pricing of carbon-based energy is not the only factor. That is, peoples' buying habits come to bear in a market economy. If consumers value a particular form of energy because it is less damaging to the environment, they will choose it. And if enough people make that choice, the market will shift naturally to accommodate those choices.
The author's problem is he doesn't like peoples' choices. He wants to force them to make choices he agrees with using the coercive hand of government. The problem with this is, it never works. It never has worked. We have ample historical evidence of it. Simply put, the author wants to mandate rather than persuade, typical for Leftists the world over. He and his ilk are unwilling, or actually, unable, to make the persuasive case for their preferred choices, and thus are left with only force.)
The other great catastrophe of our time is the financial collapse. Supposedly self-regulating markets could not discern that the securities created by financial engineers were toxic. Markets were not competent to adjust prices accordingly. The details of the bonds were opaque; they were designed to enrich middlemen; the securities were subject to investor herd-instincts; and their prices were prone to crash once a wave of panic-selling hit. Only government could provide regulations against fraudulent or deceptive financial products, as it did to good effect until the regulatory process became corrupted beginning in the 1970s. Deregulation arguably created small efficiencies by steering capital to suitable uses — but any such gains were obliterated many times over by the more than $10 trillion of GDP lost in the 2008 crash. (Once again we must point out that these ups and downs of the economy have occurred in an environment of heavy-handed legislation and regulation. The fact the some regulations were mildly relaxed 3-4 decades ago does not place the blame on the free market.
Post-Depression economic downturns happened in 1937, 1945, 1949, 1953, 1958, 1960, and 1969, despite all these "regulations against fraudulent or deceptive financial products" the author lionizes. In other words, government control has not solved the problem, and corrupted regulatory processes in the 1970s did not make the problem worse.
We also must note that the 2008 crash was precipitated by government botched intervention into the housing market, its failure to prosecute and punish lawbreakers, and its favoritism to banksters and other corporate cronies that continues to this day. None of this can be laid at the feet of the free market.)
A third grotesque case of market failure is the income distribution. In the period between about 1935 and 1980, America became steadily more equal. This just happened to be the period of our most sustained economic growth. In that era, more than two-thirds of all the income gains were captured by the bottom 90 percent, and the bottom half actually gained income at a slightly higher rate than the top half. By contrast, in the period between 1997 and 2012, the top 10 percent captured more than 100 percent of all the income gains. The bottom 90 percent lost an average of nearly $3,000 per household. The reason for this drastic disjuncture is that in the earlier period, public policy anchored in a solid popular politics kept the market in check. Strong labor institutions made sure working families captured their share of productivity gains. Regulations limited monopolies. Government played a far more direct role in the economy via public investment, which in turn stimulated innovation. The financial part of the economy was well controlled. All of this meant more income for the middle and the bottom and less rapacity at the top. (We have reason to doubt the author's characterizations, and especially the reasons he cites for them. There are thousands, if not millions of large and small factors at work in an economy the size of ours, and to single out one or two factors and draw causation is intellectually lazy.)
Clearly, a more equal economy performed better than a more unequal one. Families with decent incomes could recycle that purchasing power back into the economy. Well-regulated financial institutions could do their job of supplying investment capital to the real economy rather than enriching their own executives with speculative schemes — ones that left the rest of the society to take the loss when the wise guys were long gone. In the case of labor, there was not a single, “accurate,” market-determined wage for each job, but a wide range of possible wages and social bargains that would attract competent workers and steadily increase the economy’s productivity.
The free market doesn’t live up to its billing because of several contradictions between what libertarians contend and the way the real world actually works. (We must note that libertarian market philosophy is not in operation in our economy, and hasn't been for most of our country's existence. We have been under Keynesian economic philosophy for at least 80 years. None of the problems cited has anything to do with what libertarians have done or failed to do.)
Fundamentally, the free-market model assumes away inconvenient facts. Libertarians presume no disparities of information between buyer and seller, no serious externalities, no public goods that markets can’t properly price (Joan Fitzgerald’s piece in our special report in the Winter 2015 issue of The American Prospect magazine discusses one — water), and above all no disparities of power. But in today’s substantially deregulated economy, bankers have far more knowledge and power than bank customers (witness the subprime deception); corporations have far more power than employees; insurers have more power than citizens seeking health insurance. Labor markets can’t compensate for disparities of power. The health insurance “markets” created by the Affordable Care Act can’t fully address the deeper problem of misplaced resources and excessive costs in our medical system. (Note that the author focuses on the idea of power, and how classes have or do not have it. This is a Marxist concept. Marxism focuses on the struggle between the bourgeoisie and the proletariat, and advocates an overthrow of those with power by the worker class so that they can receive their just due.
And the idea of "misplaced resources" is also a Marxist concept, which presumes the necessity of central control of the means of production and allocation of resources. In other words, the author thinks that a bureaucracy is more competent and better able to facilitate economic choices than you are.)
The conditions of the idealized market model do describe ordinary retail markets,where there are plenty of restaurants, supermarkets, dry cleaners and hardware stores, and consumers are competent to shop around for price and quality. They don’t accurately characterize the markets in health, education, labor, finance, or technological innovation, to name just five. (What is efficient about a hedge fund mogul taking home $2 billion, or a life-saving pill that retails for $5,000 a dose?) (We're kind of anxious to see if the author is going to actually make a case against libertarianism, or if he's simply content to do guilt-by-association and throw out unadorned assertions.)
To produce an economy that is more equitable as well as more efficient, government uses a variety of tools. It regulates to counteract market failure. It taxes to provide revenues to pay for public goods that markets under-provide at affordable prices — everything from education to health to research and development. Sometimes government passes laws to sustain other elements of a social contract, such as the laws protecting workers’ rights to form unions and to collectively bargain. (An strangely innocuous list, as if this is all government really does. By this we suspect he's attempting to paint libertarians as being opposed to a very reasonable and docile government. Unfortunately for the author, libertarians are not anarchists. Libertarians expect government to do its constitutionally-mandated duties, which particularly includes the prosecution and punishment of criminals; that is, those who violate the free market by stealing, cheating, and misrepresenting their products.)
Government can invent things that markets never would have imagined. (There is no evidence that government created anything that would not have been created otherwise. In fact, there is no evidence government actually created anything period; well, except tyranny perhaps.)
Apple has created wonders, but it has piggybacked on government investment in advanced semiconductors and the Internet. America’s biotech industry’s success was reliant on massive government investment in the Human Genome Project and other basic research. (Is government spending synonymous with government creativity? Is the author suggesting that taking large quantities of money from its citizens and spending oodles of it is creative and superior to private initiatives? In what way? Evidence please.)
Later in the special report in the magazine’s Winter issue, Fred Block’s piece describes the indispensable government role in innovation. Commercial broadcasters were disinvesting in radio as a serious medium of news, public affairs, culture and humor, when along came public radio, partly underwritten by government and partly by listener-subscribers. NPR demonstrated that ingenious and high-quality noncommercial programming could attract an audience that for-profit companies did not know was there. (Um, yeah, no. A spectacularly bad example. If ever there was an poster-child of the idiocy of government, it is the Leftist-dominated NPR. Its irrelevancy is only matched by how much Leftists love it. If you want to see the exact same thing presented from the exact same perspective, just turn to NBCBSCNNMSNBC any day of the week.
Back in the day when there were three channels, perhaps there was something interesting on NPR. But even that doesn't justify government competing with the private sector, especially with the news.
But the bottom line is, no matter where you look the private sector is doing it better than NPR. And, NPR's total listenership is a bit over 25,000,000 a week, while just one guy's radio program is heard by 14,000,000 alone.)
There is another, more fundamental point ignored by libertarians: The market itself is a creature of government. (Nonsense.)
Later in the special report in the magazine’s Winter issue, Fred Block’s piece describes the indispensable government role in innovation. Commercial broadcasters were disinvesting in radio as a serious medium of news, public affairs, culture and humor, when along came public radio, partly underwritten by government and partly by listener-subscribers. NPR demonstrated that ingenious and high-quality noncommercial programming could attract an audience that for-profit companies did not know was there. (Um, yeah, no. A spectacularly bad example. If ever there was an poster-child of the idiocy of government, it is the Leftist-dominated NPR. Its irrelevancy is only matched by how much Leftists love it. If you want to see the exact same thing presented from the exact same perspective, just turn to NBCBSCNNMSNBC any day of the week.
Back in the day when there were three channels, perhaps there was something interesting on NPR. But even that doesn't justify government competing with the private sector, especially with the news.
But the bottom line is, no matter where you look the private sector is doing it better than NPR. And, NPR's total listenership is a bit over 25,000,000 a week, while just one guy's radio program is heard by 14,000,000 alone.)
There is another, more fundamental point ignored by libertarians: The market itself is a creature of government. (Nonsense.)
As Karl Polanyi famously wrote in a seeming oxymoron, “laissez-faire was planned.” Markets could not exist without states defining the terms of property ownership and commerce, creating money, enforcing contracts, protecting patents and trademarks, and providing basic public institutions. (Again the author presumes that libertarians are anarchists. Libertarians readily appeal to the necessity of government in the constitutionally limited manifestation. Government is required for an orderly society, but that does not mean that any and all government is justified.
The author seems intent on establishing that more government is ok because we have government. But the debate has never been about government vs. no government, it has always been about intrusive, abusive, unchecked government vs. constitutionally-limited government.
And the author is wrong about government creating markets. Free exchange long pre-existed governments, because people have always engaged in mutually beneficial exchanges of value.)
A Robinson Crusoe world never existed. (Actually, it did, and does to this day.)
So the real issue is not whether government “intrudes” on the market — (Attempt at diversion. The keeping of law and order is not an intrusion upon the market.)
The author seems intent on establishing that more government is ok because we have government. But the debate has never been about government vs. no government, it has always been about intrusive, abusive, unchecked government vs. constitutionally-limited government.
And the author is wrong about government creating markets. Free exchange long pre-existed governments, because people have always engaged in mutually beneficial exchanges of value.)
A Robinson Crusoe world never existed. (Actually, it did, and does to this day.)
So the real issue is not whether government “intrudes” on the market — (Attempt at diversion. The keeping of law and order is not an intrusion upon the market.)
the capitalist system is impossible without government. (Not true. Government helps, but if there were no government, there would still be rules. Some power will be at work to police violators of free exchange.)
The practical question is whose interests the state serves. (No. Government ought to serve no one's interests. It has certain constitutionally mandated duties, which it must perform regardless of consequences. No favoritism. Justice and markets are blind, and so should be government,
That's the problem. The government has its own agenda, bought and paid for by monied interests, which it seeks to impose on the rest of us. We then serve the interests of government instead of the other way around. We therefore need less government, not more.)
So the core libertarian claim that markets are efficient stands demolished by historical evidence. (Hardly. The author has yet to even make a case.)
That's the problem. The government has its own agenda, bought and paid for by monied interests, which it seeks to impose on the rest of us. We then serve the interests of government instead of the other way around. We therefore need less government, not more.)
So the core libertarian claim that markets are efficient stands demolished by historical evidence. (Hardly. The author has yet to even make a case.)
However, libertarians make a second claim: Free markets are the sublime expression of human liberty. This second contention gives libertarian ideology much of its persuasive power. In the resurrection of free-market theory after its first burial in the wake of the Great Depression, a remnant of libertarian economists led by Friedrich Hayek engaged in a technical duel with John Maynard Keynes about whether markets were self-correcting after all. Hayek won few converts. But in the 1940s, Hayek hit pay dirt with his argument that markets epitomized freedom. This claim was taken a step further by Milton Friedman a generation later.
In the idealized libertarian world, (The author makes constant reference to some sort of pie-in-the-sky viewpoint related to libertarianism, which he contrasts to the supposed real world of big government intervention. The intent of course is to dismiss the opposition perspective as being out of touch, impractical, and theoretical. Yet in the "real world," we have exactly what the author advocates, and his preferences are on display, demonstrated failures of unworkable, fanciful theories. Apparently he believes we need more of what hasn't worked, because it will work then. I'll leave the reader to decide who is "idealized.")
individuals are “free to choose” — never mind that some are born with far more resources with which to choose than others. (A typical Leftist, the author thinks that it's unfair that some have more money than others, and that those with money have an unfair advantage. Naturally, rather than lifting the poor and disenfranchised, he prefers to bring the prosperous down.
Also notice that financial disparity is the sole determiner of fairness. "Free to choose" is only about money. Leftists obsess about money. They are gravely concerned about other peoples' money and how those people are spending it and how they might get their hands on it in order to spend it properly.
Because it's all about money, there is no room in the author's world for those who through their own cleverness and diligence rising up out of their present circumstances and make a life for themselves. In fact, the typical leftist thinks the poor are incapable of anything at all, and thus must be coddled and treated as substandard. Thus the soft racism of anti-poverty programs, forcing generation after generation of minorities to stay in the 'hoods, and designed to keep them out of the neighborhoods of rich Leftists.)
In the Hayek-Friedman world, government, except for its minimal role of keeping the peace and protecting property values, is the enemy of freedom. Hayek went so far as to write a book in 1944, The Road to Serfdom, contending that democratic forms of planning were destined to lead down the same road to totalitarianism that ended with Stalin and Hitler. Hayek remained a revered figure to libertarians — he even won a Nobel Prize — despite the fact that there is not a single case where democratic planning led to dictatorship, but countless instances where market turbulence led displaced citizens to turn to anti-democratic strongmen. Adding insult to injury, the Hayek-Friedman remedy for when markets don’t work is: We need even more market. We saw how well that worked in the financial collapse. (As noted above, it was government that precipitated the collapse.)
Beyond assuming away inherited disparities, the Hayek-Friedman equation of markets and freedom leaves out the role of government in promoting affirmative liberties. A young person from a poor family who does not need to incur crippling debt to attend university is a freer person. (Beholden to government for decades paying off student loans.)
In the idealized libertarian world, (The author makes constant reference to some sort of pie-in-the-sky viewpoint related to libertarianism, which he contrasts to the supposed real world of big government intervention. The intent of course is to dismiss the opposition perspective as being out of touch, impractical, and theoretical. Yet in the "real world," we have exactly what the author advocates, and his preferences are on display, demonstrated failures of unworkable, fanciful theories. Apparently he believes we need more of what hasn't worked, because it will work then. I'll leave the reader to decide who is "idealized.")
individuals are “free to choose” — never mind that some are born with far more resources with which to choose than others. (A typical Leftist, the author thinks that it's unfair that some have more money than others, and that those with money have an unfair advantage. Naturally, rather than lifting the poor and disenfranchised, he prefers to bring the prosperous down.
Also notice that financial disparity is the sole determiner of fairness. "Free to choose" is only about money. Leftists obsess about money. They are gravely concerned about other peoples' money and how those people are spending it and how they might get their hands on it in order to spend it properly.
Because it's all about money, there is no room in the author's world for those who through their own cleverness and diligence rising up out of their present circumstances and make a life for themselves. In fact, the typical leftist thinks the poor are incapable of anything at all, and thus must be coddled and treated as substandard. Thus the soft racism of anti-poverty programs, forcing generation after generation of minorities to stay in the 'hoods, and designed to keep them out of the neighborhoods of rich Leftists.)
In the Hayek-Friedman world, government, except for its minimal role of keeping the peace and protecting property values, is the enemy of freedom. Hayek went so far as to write a book in 1944, The Road to Serfdom, contending that democratic forms of planning were destined to lead down the same road to totalitarianism that ended with Stalin and Hitler. Hayek remained a revered figure to libertarians — he even won a Nobel Prize — despite the fact that there is not a single case where democratic planning led to dictatorship, but countless instances where market turbulence led displaced citizens to turn to anti-democratic strongmen. Adding insult to injury, the Hayek-Friedman remedy for when markets don’t work is: We need even more market. We saw how well that worked in the financial collapse. (As noted above, it was government that precipitated the collapse.)
Beyond assuming away inherited disparities, the Hayek-Friedman equation of markets and freedom leaves out the role of government in promoting affirmative liberties. A young person from a poor family who does not need to incur crippling debt to attend university is a freer person. (Beholden to government for decades paying off student loans.)
A low-income mother who cannot afford to pay the doctor attains a new degree of freedom when she and her children are covered by Medicaid. (On the dole is not freedom.)
A worker who might be compelled to choose between his job and his physical safety becomes freer if government health and safety regulations are enforced. (An outlier. Government's basic function is to enforce the law.)
The employee of a big-box store who can take paid family leave when a child gets sick is freer than one whose entire life is at the whim of the boss; (Is the boss freer by not being able to negotiate the terms of employment with his employee, or has his personal aims been subverted to serve the interests of government?)
likewise a worker with a union contract that provides protection from arbitrary dismissal or theft of wages. (A union is a private assemblage of like minded people. No government needed.)
An elderly person saved from destitution by a government-organized Social Security pension has a lot more liberty than one bagging groceries at age 80 to make ends meet, or one choosing between supper and filling a prescription. (Funded by the conscription of workers, laboring not for their own interests, but those of complete strangers enforced by coercive government.)
An aspiring homeowner who doesn’t need to spend countless hours making sure that the mortgage won’t explode is freer to spend leisure time on other activities if government is certifying which financial products are sound and is prohibiting other kinds. (The author has a peculiar view of freedom. Being isolated from the consequences of life's ups and downs because government is continually rushing in to save us makes us little more than kept men and women, slaves conscripted to serve the interests of government, is hardly freedom. Quite the contrary, government is all around us, poking its nose into everything, forcing us to perform, making our choices for us, helicoptering like an overconcerned parent trying to protect her child from germs. Freedom? C'mon!)
I could go on, (Ugh. Please don't.)
I could go on, (Ugh. Please don't.)
but you get the idea. These are not arcane examples, written in the algebraic idiom of formal economics. They are common-sense experiences familiar to us all — and fruits of government spending or regulation. Clearly, there will never be enough charity, benign employer paternalism, or self-correction on the part of markets to solve these problems. (Yes, we just can't do it without government. We are helpless creatures at the mercy of cruel nature and eeeevil rich guys, and none of us can make it day to day without nanny government cradling us in its arms, cooing soft things in our ears about how sad it is we scraped our knee. Does the author even realize how condescending he is?)
Lately, as markets have gained ground at the expense of social counterweights, more of us find ourselves at the mercy of market forces, as played by bosses, insurers and financial engineers. (Wow, exactly one sentence later and he confirms everything we just said. Help us, mighty government!)
Why, then, does the libertarian appeal persist? The free-market fantasy violates both the reality of big events like the financial collapse and the lived experience of most Americans. Jeff Madrick, in our Winter issue special report, explains why the free-market model persists among economists — it creates a nice pseudo-science, and society’s most powerful people tend to reward professional economists who solemnly advise that government should keep away. But why does the libertarian ideal seduce so many regular people?
Here, we need to introduce the other main protagonist in this drama — government. (We thought he wan't going to keep going on...)
Why, then, does the libertarian appeal persist? The free-market fantasy violates both the reality of big events like the financial collapse and the lived experience of most Americans. Jeff Madrick, in our Winter issue special report, explains why the free-market model persists among economists — it creates a nice pseudo-science, and society’s most powerful people tend to reward professional economists who solemnly advise that government should keep away. But why does the libertarian ideal seduce so many regular people?
Here, we need to introduce the other main protagonist in this drama — government. (We thought he wan't going to keep going on...)
To Hayek, Friedman and other libertarian theorists, government is a hopeless case because the state is a monopoly. Even in a democracy, periodic elections are a clumsier form of accountability than the instant discipline of adjustments in price — the market’s version of self-correction. Fellow libertarian theorists such as James Buchanan, another Nobel laureate, added the thought that governments might serve the general interest in theory but in practice bureaucrats were prone to feathering their own nests. Buchanan, missing the irony, termed this behavior “rent-seeking,” which is an old-fashioned economists’ term for pursuit of monopoly profits by market players. Any fair assessment of who is the bigger rent-seeker would point to bankers and corporate monopolies far more than public officials.
However, the story gets more complicated when there is a revolving door between government officials and industries. In that case, it isn’t “the state” or “the market” that is the inefficient culprit, but a corrupt symbiosis between the two. That reality tends to blur the argument. When Hayek and Friedman were first writing, their story was less plausible because government and the larger social contract that it sponsored were delivering for most regular people. That’s less the case today.
In Chicago, parking meter costs have gone through the roof because of a privatization deal promoted by Democrats with Wall Street connections.
Ann Hagedorn, in her article for this special report, describes privatization as a case of corrupt government-market symbiosis. Chris Christie, governor of New Jersey, steers contracts to a crony to operate government-supported halfway-house prisons. The halfway houses are a disaster — conditions are deplorable; inmates are able to walk away; the vendor is reaping windfall profits. Who is to blame? Voters conclude that the public officials and private contractors are all scoundrels. And such arrangements aren’t devised only by market-loving, government-hating Republicans like Christie. The public is just as cynical when the Obama administration bails out Wall Street. One of Obama’s top White House economic officials, Michael Froman, in a previous career at Citigroup, ran a private equity group that tried to privatize the Pennsylvania Turnpike. In Chicago, parking meter costs have gone through the roof because of a privatization deal promoted by Democrats with Wall Street connections.
As Michael Lipsky writes in a new paper for Demos, (He keeps going on and on...)
However, the story gets more complicated when there is a revolving door between government officials and industries. In that case, it isn’t “the state” or “the market” that is the inefficient culprit, but a corrupt symbiosis between the two. That reality tends to blur the argument. When Hayek and Friedman were first writing, their story was less plausible because government and the larger social contract that it sponsored were delivering for most regular people. That’s less the case today.
In Chicago, parking meter costs have gone through the roof because of a privatization deal promoted by Democrats with Wall Street connections.
Ann Hagedorn, in her article for this special report, describes privatization as a case of corrupt government-market symbiosis. Chris Christie, governor of New Jersey, steers contracts to a crony to operate government-supported halfway-house prisons. The halfway houses are a disaster — conditions are deplorable; inmates are able to walk away; the vendor is reaping windfall profits. Who is to blame? Voters conclude that the public officials and private contractors are all scoundrels. And such arrangements aren’t devised only by market-loving, government-hating Republicans like Christie. The public is just as cynical when the Obama administration bails out Wall Street. One of Obama’s top White House economic officials, Michael Froman, in a previous career at Citigroup, ran a private equity group that tried to privatize the Pennsylvania Turnpike. In Chicago, parking meter costs have gone through the roof because of a privatization deal promoted by Democrats with Wall Street connections.
As Michael Lipsky writes in a new paper for Demos, (He keeps going on and on...)
“Rulemaking as a Tool of Democracy,” regulation is more popular than many politicians think. It is unpopular in the abstract, but citizens count heavily on government regulation to protect against everything from polluted air, to unsafe food and drugs, to dangerous conditions at work. Nonetheless, the anti-regulators are on the march. Republicans are promoting a general regulatory rollback. Lipsky quotes the libertarian Cato Institute website: “There is no greater impediment to American prosperity than the immense body of regulations chronicled in the Federal Register.” Of course, nearly all of these regulations are there because of some market failure or corporate abuse that resulted in citizen pressure on Congress for reform. Yet even some Democrats are seduced by the supposed inefficiency of regulation. Cass Sunstein, who served for nearly three years as President Obama’s regulatory czar, actually bragged in a recent book that the Obama administration in its first four years had issued fewer regulations than its three predecessors had done — this at a time when new corporate abuses were proliferating.
Unfortunately, the neat story of an inefficient, unjust and calamity-prone market, contrasted with a public-minded government as democratic counterweight, is harder to tell in 2015 than it was, say, in 1965. Half a century ago, there were clearer bright lines between what was public and what was private. The state governed the market, producing economic security, opportunity, and rising living standards for most working families. But today’s reality of revolving doors and corrupt “public-private partnerships” blurs the argument, both as ideology and as politics.
For younger voters, it has been a long time since government provided the economic security and opportunity it offered their parents and grandparents. If government is providing little help, young adults are more inclined to bet on the free market and save some tax dollars. Market applications such as Airbnb, which allows travelers to save money by booking rooms in private homes, seem modern and hip. Young people who grew up with iPhone apps like the coolness and convenience of the Uber ride-sharing service (never mind that most drivers can’t make a living).
A number of social scientists and journalists, such as Tom Frank (who is both) in his book, What’s the Matter with Kansas?, keep wondering why working-class voters, especially whites, fail to vote their economic self-interest. In surprisingly large numbers, they support Republicans, who would remove the weakened social protections that remain, cut back Social Security and Medicare, make the tax code even more regressive, and make American workers even more vulnerable to low-wage competition from overseas. Frank blames the cultural conservatism of much of the white working class.
But there is a more disconcerting explanation. It has been a long time since government effectively did its job of tempering the market in the interest of ordinary people. A further problem of this blurring between the public and the private is that it adds great complexity. That makes regulations and government programs harder to administer, and diffuses blame when citizens find themselves frustrated with the result. Ultimately, the government tends to take the fall more than the market.
Consider the Affordable Care Act. Because Democrats lacked the votes and political will to fight for a true public program, we were left with a mandate for citizens to buy private insurance, subject to complex regulations, subsidies and enrollment procedures. The launch of the program was a mess. To many citizens, the fiasco confirmed everything they suspected about government and liked about markets. How come it’s so easy to order a book on Amazon and so hard to enroll for health insurance on Healthcare.gov?
You had to be a political scientist to appreciate the full explanation that Obamacare was the bastard child of market institutions (drug and insurance industries) that had become too powerful and a government settling for the best it could get. It was also a product of some moderate Democrats’ misplaced belief that a government-regulated “insurance market” could solve problems in a public good (health care) that markets haven’t solved and can’t solve. At this writing, some government officials are chiding frustrated citizens, who like the coverage but are exasperated by Healthcare.gov, for their failure to do enough shopping around for insurance. Most citizens would prefer the convenience, reliability and simplicity of a trusted public program like Medicare to the ordeals of comparison shopping and detail-deciphering on their laptops.
Or take the case of the Dodd-Frank Act. More than four years after the act was passed, most of its key provisions have yet to be carried out. That’s because the act requires several hundred separate “rule-makings” by beleaguered and often compromised government agencies. Dodd-Frank is drowning in regulatory complexity because it failed to deal with the underlying complexity of the financial industry. It would have been far better had Congress passed a law setting a few hard-to-evade bright lines, such as bringing back the 1933 Glass-Steagall Act that separated government-insured commercial banking from stock brokerage and investment banking. The more complex the process of government regulation, the less citizens know whom to blame when the economy goes off the rails.
This blurring of accountability was on display in the passage of the December 2014 budget resolution. As their price for not shutting down the government, Republicans demanded and got a watering down of a key provision of Dodd-Frank prohibiting bankers from speculating with government-insured money. In principle, that ploy should have set up a clear, politically useful differentiation — Republicans are toadies of Wall Street and Democrats are for tough regulation to protect taxpayers and investors. Except that 57 House and 32 Senate Democrats, many with close ties to Wall Street, voted for the deal.
Based on the evidence, the case against the libertarian market and for democratic government is stronger than ever. But when government gets into bed with private industry and finance at the expense of regular people, the citizenry loses confidence in government. Republicans bet that if they could just hamstring government, more voters would either stay home or would conclude that they were better off voting for the party that wants to slash government. This cynical Republican view was rewarded with an increase in anti-government attitudes in public opinion. The turnout in 2014 was the lowest since 1942, and much of the falloff was among groups that vote for Democrats when they vote at all — minorities, the poor and the young.
So if we are to win the argument with the libertarians, we need to take back effective government. Friedman was wrong to argue that the cure for market failure is more market. However, the cure for weak or corrupted democracy has to be more democracy. The only way to redeem public confidence in government as a necessary check on the market is to repair faith in democracy itself. It is not difficult to prove that the claim of market efficiency is delusional. Reclaiming our democracy will be harder — but it must be done.
(Gawd, this guy just keeps writing. Unable to make a cogent point, he keeps repeating leftist memes like the artificial voice in my supermarket self-checkout. It's this reflexive, anti-intellectual, Marxist crap that so enraptures the so-called Bright Ones on the Left, endlessly parroted, persistently reintroduced, unfailingly re-implemented, and recycled day after day and year after year despite its patent unworkability that drives me up the wall.
And why do they do this? Because they are convinced that socialism works, it just hasn't been tried with the right people, the right money, the right commitment, and the right agitprop campaign. You see, the idea is sound, it's the implementation that has failed. This entitles the Left to unlimited do-overs, and we are the ones who must endure the financial and societal devastation they have wrought.
And yet libertarianism is the problem? An economic philosophy that exists nowhere in the world at present is what causes all the evils of mankind? Whaaa?)
Unfortunately, the neat story of an inefficient, unjust and calamity-prone market, contrasted with a public-minded government as democratic counterweight, is harder to tell in 2015 than it was, say, in 1965. Half a century ago, there were clearer bright lines between what was public and what was private. The state governed the market, producing economic security, opportunity, and rising living standards for most working families. But today’s reality of revolving doors and corrupt “public-private partnerships” blurs the argument, both as ideology and as politics.
For younger voters, it has been a long time since government provided the economic security and opportunity it offered their parents and grandparents. If government is providing little help, young adults are more inclined to bet on the free market and save some tax dollars. Market applications such as Airbnb, which allows travelers to save money by booking rooms in private homes, seem modern and hip. Young people who grew up with iPhone apps like the coolness and convenience of the Uber ride-sharing service (never mind that most drivers can’t make a living).
A number of social scientists and journalists, such as Tom Frank (who is both) in his book, What’s the Matter with Kansas?, keep wondering why working-class voters, especially whites, fail to vote their economic self-interest. In surprisingly large numbers, they support Republicans, who would remove the weakened social protections that remain, cut back Social Security and Medicare, make the tax code even more regressive, and make American workers even more vulnerable to low-wage competition from overseas. Frank blames the cultural conservatism of much of the white working class.
But there is a more disconcerting explanation. It has been a long time since government effectively did its job of tempering the market in the interest of ordinary people. A further problem of this blurring between the public and the private is that it adds great complexity. That makes regulations and government programs harder to administer, and diffuses blame when citizens find themselves frustrated with the result. Ultimately, the government tends to take the fall more than the market.
Consider the Affordable Care Act. Because Democrats lacked the votes and political will to fight for a true public program, we were left with a mandate for citizens to buy private insurance, subject to complex regulations, subsidies and enrollment procedures. The launch of the program was a mess. To many citizens, the fiasco confirmed everything they suspected about government and liked about markets. How come it’s so easy to order a book on Amazon and so hard to enroll for health insurance on Healthcare.gov?
You had to be a political scientist to appreciate the full explanation that Obamacare was the bastard child of market institutions (drug and insurance industries) that had become too powerful and a government settling for the best it could get. It was also a product of some moderate Democrats’ misplaced belief that a government-regulated “insurance market” could solve problems in a public good (health care) that markets haven’t solved and can’t solve. At this writing, some government officials are chiding frustrated citizens, who like the coverage but are exasperated by Healthcare.gov, for their failure to do enough shopping around for insurance. Most citizens would prefer the convenience, reliability and simplicity of a trusted public program like Medicare to the ordeals of comparison shopping and detail-deciphering on their laptops.
Or take the case of the Dodd-Frank Act. More than four years after the act was passed, most of its key provisions have yet to be carried out. That’s because the act requires several hundred separate “rule-makings” by beleaguered and often compromised government agencies. Dodd-Frank is drowning in regulatory complexity because it failed to deal with the underlying complexity of the financial industry. It would have been far better had Congress passed a law setting a few hard-to-evade bright lines, such as bringing back the 1933 Glass-Steagall Act that separated government-insured commercial banking from stock brokerage and investment banking. The more complex the process of government regulation, the less citizens know whom to blame when the economy goes off the rails.
This blurring of accountability was on display in the passage of the December 2014 budget resolution. As their price for not shutting down the government, Republicans demanded and got a watering down of a key provision of Dodd-Frank prohibiting bankers from speculating with government-insured money. In principle, that ploy should have set up a clear, politically useful differentiation — Republicans are toadies of Wall Street and Democrats are for tough regulation to protect taxpayers and investors. Except that 57 House and 32 Senate Democrats, many with close ties to Wall Street, voted for the deal.
Based on the evidence, the case against the libertarian market and for democratic government is stronger than ever. But when government gets into bed with private industry and finance at the expense of regular people, the citizenry loses confidence in government. Republicans bet that if they could just hamstring government, more voters would either stay home or would conclude that they were better off voting for the party that wants to slash government. This cynical Republican view was rewarded with an increase in anti-government attitudes in public opinion. The turnout in 2014 was the lowest since 1942, and much of the falloff was among groups that vote for Democrats when they vote at all — minorities, the poor and the young.
So if we are to win the argument with the libertarians, we need to take back effective government. Friedman was wrong to argue that the cure for market failure is more market. However, the cure for weak or corrupted democracy has to be more democracy. The only way to redeem public confidence in government as a necessary check on the market is to repair faith in democracy itself. It is not difficult to prove that the claim of market efficiency is delusional. Reclaiming our democracy will be harder — but it must be done.
(Gawd, this guy just keeps writing. Unable to make a cogent point, he keeps repeating leftist memes like the artificial voice in my supermarket self-checkout. It's this reflexive, anti-intellectual, Marxist crap that so enraptures the so-called Bright Ones on the Left, endlessly parroted, persistently reintroduced, unfailingly re-implemented, and recycled day after day and year after year despite its patent unworkability that drives me up the wall.
And why do they do this? Because they are convinced that socialism works, it just hasn't been tried with the right people, the right money, the right commitment, and the right agitprop campaign. You see, the idea is sound, it's the implementation that has failed. This entitles the Left to unlimited do-overs, and we are the ones who must endure the financial and societal devastation they have wrought.
And yet libertarianism is the problem? An economic philosophy that exists nowhere in the world at present is what causes all the evils of mankind? Whaaa?)
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